Brussels against Californian tech giants ECJ issues billion-dollar rulings on Google and Apple

The European Court of Justice makes landmark rulings on Google and Apple. The dispute is about money - but also about the question of whether the EU Commission's strategy for dealing with tech giants is working.

On Tuesday, two major technology companies will have billions at stake before Europe's highest court. The European Court of Justice (ECJ) will rule on a competition fine for Google and back taxes for Apple. The EU Commission is behind both proceedings.

The Google case concerns a protracted dispute over the price comparison service Google Shopping. The EU Commission imposed a fine of 2.4 billion euros on Google in 2017. It argued that the internet giant favored the results of its own price comparison service over those of its competitors on the general search results page. According to the information provided, Google presented the search results of its service at the top of the page and highlighted them with images and text. The search results of the competing services only appeared further down as a blue link.

According to the EU Commission, this is why users clicked on the results of Google's price service more often than those of the competition. However, these were dependent on the data traffic from Google's general site in order to continue to be commercially successful. Google had therefore abused its dominant market position, the Brussels authority argued in 2017. Google and its parent company Alphabet initially took legal action against the EU fine before the EU General Court without success and then appealed to the higher-level ECJ, which has now announced its verdict.

The prospects are not good for Google: the Advocate General ruled in favor of the EU Commission in her opinion. Such an assessment is not binding, but the court often follows it.

Apple faces a setback

Apple's case involves back tax payments originally amounting to 13 billion euros - plus interest. The EU Commission ordered the iPhone manufacturer to pay the amount in 2016 and the money has been held in an escrow account ever since. In 2020, Apple prevailed before the EU court, which declared the additional claim null and void. The judges argued that the Commission had not been able to prove that Apple's tax agreements in Ireland from 1991 and 2007 constituted prohibited state aid.

In principle, free competition should prevail in the EU. Individual member states may not distort this competition with special benefits for individual companies. Ireland and Luxembourg in particular have been criticized in the past for tax deals. The Commission appealed to the ECJ, which has now announced its verdict.

The Advocate General at the ECJ came to the conclusion that the ruling of the EU Court should be overturned due to a number of errors. Unlike with Google, the legal dispute would not necessarily be over; the lower EU court may have to decide again. The iPhone group has always emphasized that the income of the two Irish subsidiaries in question was primarily taxable in the USA. Apple was therefore asked to pay twice.

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Landmark cases for the EU Commission

If the judges follow the conclusions in both cases, this would be a major triumph for the EU Commission and outgoing Competition Commissioner Margrethe Vestager. For years, Brussels has been struggling with how to prevent distortions of competition by the giant tech companies.

In addition to laws such as the Digital Markets Act (DMA), which is intended to combat the dominance of large online platforms, the EU Commission's competition watchdogs have imposed several fines totaling a good eight billion euros on Google in recent years. However, the company quickly digested these with its booming online advertising business. The Brussels authority has also repeatedly taken action against certain tax deals. The measures were not always successful, with some decisions being overturned by European courts.